The Sillion Briefing 26.07.2024
Need-to-know corporate sustainability and ESG news, delivered fortnightly
In this edition...
King's Speech
UK renewable targets
EU climate transport funding
Corporates urge conservation
Havas loses B Corp
EU sustainable finance barriers
Government
Climate at the heart of King's Speech
As is traditional, King Charles’ annual Speech to Parliament outlined the legislative priorities set by the new Labour government, with specific reference to “the urgency of the global climate challenge” and the need to boost investment in the green economy. Topics noted for missing detail included nature and farming, electric vehicles, and shipping. Here are the key climate-related bills:
Planning and Infrastructure Bill: Sweeping planning reform designed to accelerate the rollout of clean energy infrastructure. It includes a streamlined approval process for major projects and a revamped regime of National Policy Statements, reviewed every five years.
Great British Energy Bill: The new state company is to have the power to develop, own and operate assets. It will be based in Scotland.
Sustainable Aviation Fuel / Revenue Support Mechanism Bill: In continuity with the previous government, plans for a revenue certainty mechanism that guarantees prices for SAF produced at UK refineries will proceed.
Water (Special Measures) Bill: To strengthen the authority of the water regulator Ofwat to impose special measures on failing water companies that breach pollution regulations.
Skills England Bill: Simplifying the UK’s current skills system, with a focus on green skills development.
Energy
Cornwall Insights: UK will miss Labour's decarbonisation targets
New analysis has found that Britain is falling short of the wind and solar development needed to hit the Labour government’s target of decarbonising the UK’s power sector by 2030. Cornwall Insights has predicted that wind and solar will supply about 44 per cent of Britain’s electricity by 2030, but estimate a much higher 67 per cent is necessary. The new government seems to be acting quickly on this challenge – this week in his first Parliamentary statement as Energy Security Secretary, Ed Miliband announced plans to set up a new onshore wind taskforce and publish a new solar roadmap to accelerate new project development. Labour's new publicly owned energy company, Great British Energy, also announced plans to use Crown Estate seabed for windfarms to increase the UK's renewable energy capacity, funded by £8.3bn from a windfall tax on oil and gas companies, aiming to lower household energy bills and reduce reliance on fossil fuels. Meanwhile in Wales, a new publicly-owned renewable energy developer called Trydan Gwrdd Cymru has been launched, which will initially focus on boosting the country’s onshore wind capacity.
Transport
EU: Record €7bn for climate transport infrastructure
The European Commission has announced €7 billion for the development of sustainable, safe, and smart transport infrastructure. This funding will support 134 projects through the Connecting Europe Facility (CEF), the EU’s instrument for strategic investment in infrastructure. This is the largest investment so far under the programme, with 83 per cent of the funding focusing on meeting the EU’s key climate objective to modernise connections across rail, waterways and ports routes on the trans-European transport (TEN-T) network. Addressing transport-related emissions forms a critical part of the objectives of the EU Green Deal.
Policy & Regulation
Businesses want stronger nature conservation and restoration planning
More than 130 businesses, including Nestlé and IKEA, have urged world leaders to strengthen the policies, initiatives and legislation supporting nature conservation and restoration pledges. They have made five key recommendations for better nature-related actions - ensure businesses protect nature; manage resources sustainably; embed nature in disclosures; align financial flows towards nature positive; and strengthen global agreements. No doubt the corporations’ plea will be debated at the UN Biodiversity Conference (COP15) in Colombia later this year. The signatories have combined revenues exceeding $1.1trn, indicating the scale of private sector support for additional guidance on nature conservation and restoration.
Corporate
Havas agencies lose B Corp over Shell work
Global advertising and communications company Havas has had its B Corp certifications revoked across four of its agencies. This decision stems from the parent company’s contract with energy giant Shell, Last year, Havas’ CEO Yannick Bolloré defended the company’s decision to take on a major advertising contract with Shell on the grounds they could use its insider position to influence the company to become more sustainable. This has put the Havas under scrutiny for some time. Last year, more than 20 B Corp certified communications agencies signed an open complaint letter to the verification group asking them to re-evaluate Havas’ status.
Sillion’s founder Tom Rayner spoke to The Drum to give his views: “B-Corp status is worn as a badge of integrity, but its qualifying criteria are mostly toothless governance hurdles. We all know plenty of morally dubious agencies that have achieved it. Until that changes, B Lab and the certification program will continue to face these contradictions. Stop worrying about badges – we all know which work we should be saying yes and no to.“
Finance
FMO: EU sustainable finance rules too strict
The head of the Dutch development finance institution FMO, Michael Jongeneel, has said that stringent EU rules on sustainable finance are creating barriers for investment in emerging markets, allowing Chinese and Middle Eastern groups to pull ahead to fill the gap. Jongeneel stated that the rules disadvantage development finance institutions (DFIs) by excluding overseas investments from being classified as sustainable under the "green asset ratio." This EU metric is designed to indicate the portion of a bank’s assets that are climate-friendly and is becoming more commonly used by institutional investors aiming to fulfil environmental, social, and governance criteria, opening banks up to reputational risks that deter private capital.
The percentage of the world’s steelmaking capacity under development using electric arc furnaces (EAFs) has hit 49%, marking a 6% increase since last year, according to GEM’s latest ‘Pedal to the Metal’ report. The figures indicate a slow but significant shift towards lower-emission technologies, which is critical for decarbonising an industry responsible for 7% of global greenhouse gas emissions.
Despite the positive progress, coal-based blast furnaces (BF-BOFs) are still the dominating steelmaking method for projects under construction. Considering steel is central to the building out of decarbonised energy infrastructure, production is set to considerably rise over the coming years.
One number:
49%
Calendar
Q4 2024 | SBTi: Draft Corporate Net-Zero Standard V2 Public Consultation
December 2024 | EU Deforestation Law due diligence obligations imposed
Q1 2025 | UK Sustainability Reporting Standards (SRS) published
FY24 reporting | CSRD: EU firms already subject to NFRD (and large non-EU subsidiaries) to report ESRS
FY25 reporting | CSRD: Large private companies to report ESRS
FY25 reporting | CSRD: Non-EU companies (incl. UK) to report ESRS for large subsidiaries
FY26 reporting | ISSB S1 and S2 standards become effective in the UK
FY26 reporting | Transition planning, likely through TPT framework, to potentially become mandatory through UK SRS
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